Archive for precious metals trading

A strong performance for spot gold yesterday which closed the gold trading session as a wide spread up candle which finally broke out from the recent sideways consolidation of the past few weeks. In addition to injecting some much needed momentum into the gold chart, the close at $1383.95 per ounce also took us well above potential resistance at the $1381 level and, as such, this should now provide a solid platform of support for a continuation of the move higher and a return to the longer term upwards trend. The break to the upside came as no great surprise given the series of higher lows over the preceding two weeks which, as always, give a strong signal that any break from a sideways consolidation is likely to be to the upside. The positive momentum has spilled over into this morning’s early trading with gold trading, at time of writing, at $1389.45 per ounce, having attempted to breach the $1400 per ounce price level once more. The 9 day moving average has crossed above the 14 day giving us a further bullish signal and with the 40 day average providing an excellent platform in the medium term we should now expect to see gold climb higher towards our initial target of the $1424 high of early November.

An interesting and volatile for spot gold yesterday which saw the precious metal reach a high of $1424 per ounce and low of $1383 before closing the gold trading session as a narrow spread down candle but with wicks to both top and bottom, and eventually closing at $1396.35. The candle thus formed is giving us a strong signal that we may see a temporary pullback from the recent surge higher and indeed in today’s gold trading session so far, this has certainly been the case once again with the spot gold price oscillating between $1410 to the upside and $1383 to the downside. Should today’s doji candle be confirmed at the close tonight then this will add further weight to the analysis suggesting a re-tracement and a possible pullback to test the 9 day moving average which currently sits at $1377.21 on the daily spot gold chart.

Over the last two days this has remained untested and any breach here may bring the 14 day into play along with a potential platform of support at $1378.04. With the longer term trend still remaining firmly bullish yesterday’s candle is simply symptomatic of a market that was beginning to overheat and, as such, is cooling off before resuming its upwards path.

The bullish trend for spot gold shows no sign of abating with the spot gold price surging higher once again yesterday to close at $1405.50 per ounce, having achieved an intra day high of $1410.40. This bullish sentiment has spilled over in today’s gold trading once again, as the spot gold price has continued to climb to trade at time of writing at $1420.65, only $30 per ounce short of my end of year forecast of $1450 per ounce which I will now have to revise upwards!!

The upwards momentum has been given a further boost in the last few days by some loose talk of a possible return to some form of “gold standard” in an endeavour to bring some measure of control to the currency markets. However, given that the original gold standard was largely responsible for the Great Depression this seems highly unlikely, but it is certainly helping to propel the precious metal higher and indeed in an article I posted last night there was a suggestion that gold could even achieve $10,000 per ounce when considered against previous benchmarks of bonds and equities. You can read this article by following this link. Gold Standard

Friday’s positive close above all four moving averages for the spot gold price re-established the longer term bullish trend as the gold price ended at $1359.20 per ounce whilst also breaking above the recent sideways price platform. Despite today’s minor pullback spot gold managed to trade and hold above our moving averages with the 14 day in particular providing the support to today’s downside test. Whilst the 40 day continues to slope higher, we do need to see the 9 day cross back above the 9 day together with a re-test of the highs of mid October to be certain that the present pullback is nothing more than a minor blip. This week’s focus across the markets is, of course, Wednesday’s FOMC rate decision and statement which is expected to announce details of the FED’s next phase of quantitative easing. The reaction will be seen across all market sectors, not least the US dollar which is expected to fall, with a consequent rise in commodities, and gold in particular.

The spot gold price sold off sharply yesterday, along with many other metals in the commodity market, such as copper and silver with crude oil also reacting to the news that China had surprisingly increased its interest rates by 0.25% – news which surprised the markets, driving the US dollar higher as a result. Moreover, the long awaited correction in spot gold duly arrived with a wide spread down candle which closed below both the 9 and 14 moving averages on the daily gold chart. The question is now, of course, whether this now represents a fundamental shift in sentiment or is merely a short term correction. From a fundamental perspective a rise in Chinese interest rates, whilst interesting, is hardly a sentiment changing event and the only reason for the reaction was that the news was not scheduled and therefore caught the markets off guard. Had this been a scheduled announcement and released as such, then the market reaction would have been more muted. As such we can therefore assume that the status quo will be reinstated shortly with the dollar falling lower in due course and commodities regaining yesterday’s lost ground as investors see an opportunity of buying into the market at lower prices, which appears to be happening already in the gold market, as we trade off yesterday’s lows at $1340.50 at time of writing. From a technical perspective we need to see a break and hold back above the 9 day moving average which currently sits at $1356.90 and once clear of this level then a re-test of the all time high of $1386.82 per ounce will become increasingly likely. Despite yesterday’s sharp pull back the longer term moving averages remain firmly positive and in due course this will be seen as a temporary pull back in the longer term bullish trend.